Equity Stripping/Lines Of Credit
Going to put my properties under my LLC. Was considering Equity Stripping as well to protect my assets further. Question.... An LOC on the equity in the property, as far as banks are concerned, is considered a second mortages even if not borrowed on, is this also some kind of equity stripping. Can some laywer get money from equity that is tied up by a LOC in a property. Thank You all So Much .......
An LOC gives you the right to pull out cash. You have not pulled out the cash so there is still equity there.
If you pull out the cash and then leave it laying around where it can be found you are no better off.
Hence you do not want an LOC with lots of equity waiting for the law suit to be filed. A smart lawyer will trace where the funds went and after the suit is filed you are not really allowed to be moving things around to hid them. You want to hid them before the suit is filed.
Backing all the way up...
Consider using insurance. An umbrella policy plus normal comp insurance will give you a lot of protection. If you have assets that are worth less then 1-2M then you may find the insurance covers you for a whole lot less money. An LLC and other such things are not the best when it comes to certain changes you might want to make later. The insurance causes no issues with the title.
Beyond law suits you should also consider estate planning. You might die before you get sued. In that case how you have organized things can and will impact the taxes owed. Consider using an tax/estate planning attorney and sort out both the liability and estate issues at one go. I believe you will find that most good attorney's will not suggest an LLC if you are mostly talking about your residence.
John
PS. The advice above is based on personal experience so this is not theory.
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